To keep the city out of bankruptcy court, the Act 47 team said Harrisburg needs more than prestige from the civic and cultural institutions that own almost half its real estate.

Namely, cash.

If they had to pay property taxes, the city’s landowning nonprofits would owe nearly $12 million a year, according to the Act 47 report. But they don’t have to pay anything, and so most don’t.

Now, the Act 47 teams says, it’s time for Harrisburg to ask its nonprofits to help the city out of its financial crisis. Explain the important role a healthy city plays in their success, then pass the hat.

These payments in lieu of taxation — dubbed PILOTs — wouldn’t erase the incinerator debt. They wouldn’t even pay the annual debt service.

If Harrisburg could up its current payments from $410,000 last year — if most nonprofits could pay even a quarter of their property tax bill, the team says — it would have a huge impact on the city’s annual budget of about $56 million.

It’s worked elsewhere.

Lancaster received more than $1.5 million in voluntary nonprofit payments last year. Such contributions have covered $4 million, or roughly 1 percent of Pittsburgh’s $400 million budget, according to the Act 47 team.

But, as nonprofits are stretching every cent and governments are cutting budgets, can Harrisburg really count on a new windfall from contributions?

The team is cautiously optimistic some nonprofits could be persuaded to come onboard. Some city officials, and nonprofit leaders, are less certain.

Would those institutions that already chip in, such as Pinnacle, double their investment? Could those that don’t, especially city-based nonprofits that cater to suburban users, be compelled to pay more?

Should they?

Deadbeat governments

Harrisburg’s biggest problem — at least in this section of the 418-page Act 47 report — is who owns its land.

The state holds deeds on 41 percent of the city’s tax-exempt land, according to the report. City, county, federal, school district, parking and various authority buildings account for another 24 percent of untaxable real estate.

“You know what they’re doing over there with the rest of the budget,” city controller Dan Miller said of further state contributions. “It doesn’t seem likely.”

Some legislators have proposed new revenue streams for Harrisburg and other cities with state and county buildings, but no one’s rushing to vote for them.

More immediately, Rep. Ronald Buxton, D-Harrisburg, is trying to get the extra $500,000 restored. Corbett’s office declined to comment on any policy aspect of the Act 47 proposal.

Dauphin County will continue to contribute $10,000 to Harrisburg’s Downtown Improvement District. But don’t expect Dauphin County, which would contribute to the city in other ways under the plan, to volunteer a larger percentage of its theoretical $1.1 million tax bill.

To attract more PILOTs, it seems Harrisburg will have to focus on its other nonprofit property owners.

The cities that typically have success attracting these payments, Schuettler said, are those that can build partnerships with institutions that need a healthy city to promote their brand. Colleges with on-campus housing, museums and health systems might be wooed.

Now, said Act 47 team member Julia Novak, it’s time for other nonprofits to kick in — and for those already paying to see if they could contribute more.

“Opening the conversation with the larger community is very important for the long-term viability of the community,” Novak said.

What works, what doesn’t

To see the best-case scenario for raising money from nonprofits, Harrisburg should look southeast.

Only about 30 percent of Lancaster’s properties are tax-exempt, but 175 organizations paid the city something last year, including a number of churches, according to city business administrator Patrick Hopkins.

Lancaster is trying to expand the program. It’s writing nonprofits letters explaining what their theoretical tax bill would be and asking them to pay a third.

The vast majority of Lancaster’s PILOT money comes from two sources: Lancaster General Hospital and Franklin & Marshall College.

Lancaster General has volunteered money for at least two decades. The $1.38 million it pays the city is more than it would owe if it paid property taxes. The college pays $160,000 and contributes another $40,000 in in-kind services, Hopkins said.

As in Schuettler’s recipe for success, the hospital and the college are located near downtown. Both would be affected if Lancaster began to crumble.

Seeing that Reading was receiving money from only a few tax-exempt property owners — mostly $50 to $100, with a few larger payments — that city’s Act 47 team suggested going after PILOTs. Reading reached out to the top 25 tax-exempt landowners, from a list of hundreds, to ask for help, said Mayor Tom McMahon. That list included three colleges and universities and two hospitals.

One of the hospitals countered that the charity care it provides at its downtown clinic is its contribution to the city, McMahon said.

It’s a great service, he said, “but it doesn’t help pay for fire and police protection, which accounts for about 65 percent of the budget.”

Some churches have contributed small amounts, which McMahon said is the spirit he hopes to see as the program moves forward. But this isn’t easy.

“In many cases,” McMahon said, “it’s going to be a hard sell.”

Something beyond money

Harrisburg will receive more contributions only if it asks, something Miller said the city hasn’t done consistently for years.

Considering the disarray in city government — the office most likely to recruit donors, the business administrator, is empty — this probably won’t be a top priority.

“If this was the only thing there was, and if there was a concerted effort, we could probably increase” PILOTs, Miller said. “But does the city have the staff to do that?”

Once it gets around to asking, Harrisburg might hear many of the same answers McMahon is hearing in Reading.

HACC owns property with a taxable value of just under $1 million. In an email, interim president Ron Young said: “We would study any specific proposal, but in light of cuts to our revenue and the positive economic impact that we bring to Harrisburg and the region, it would be difficult to add this expense to our budget.”

The Whitaker Center paid property taxes until it received an exemption.

“As a charity that was created to serve the community, we provide countless resources to the city and the region to improve the quality of life for all citizens, including significant economic impact in the order of approximately $20 million per year,” spokesman Michael Chapaloney wrote in an email. The center “does not have the resources to make additional payments to the city.”

Market Square Presbyterian Church, like many downtown legacy churches, has a mostly suburban congregation that travels into the city to worship, said its pastor, the Rev. James Brown. The noncity residents clearly have a commitment to the city. They want to see it prosper.

If they were to have a conversation about how to best serve the city, Brown said, the church would have to weigh its contributions. Should it commit the money it has to more work with the homeless or the city’s bottom line?

“Clearly we’re in a climate where there will be new levels of discussion,” Brown said. “Everyone begins to think of ways to help.”

What about Novak’s suggestion that nonprofits already paying the city should follow Lancaster General’s example and contribute more?

That would be a policy decision, Pinnacle spokesman Gray Onobrakpeya said.

Not only does Pinnacle make the highest payment to the city, it pays another $50,000 for downtown revitalization and more than $364,000 to the Harrisburg School District.

What’s more, Onobrakpeya said, “a substantial portion of our services go to charity care” in Harrisburg, with roughly 40 percent of the care provided to people without insurance. The hospital is also one of the largest employers in the city.

“PinnacleHealth is a net plus instead of a net minus” to the city, Onobrakpeya said.

Still, the Act 47 team said the city must begin asking.

If the plan is approved, an implementation team will be formed to solicit donations. That team likely will include nonprofit leaders and outside experts.

Depending on what City Council and Mayor Linda Thompson do in the next month, you nonprofit landowners should be ready. Your phone will ring.

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